How to Get Rid of a House Without Bankruptcy or Foreclosure

Getting out of your house doesn't have to be a financial catastrophe.

The best way to release yourself from the obligations of a mortgage without going through foreclosure or bankruptcy is to conduct a short sale or simply sell the house. A short sale means selling the home at a loss, when the total value of the home is less than the outstanding value of the mortgage. Once you sell the home, you can use the funds to pay for the mortgage, either eliminating it or reducing the principal to a manageable amount.

Instructions

1. Continue to pay your mortgage while you try to find someone to buy your house. If you fall late on payments, the penalties can be significant, and may push you into foreclosure before you can find a buyer. This is particularly important if you're going through a short sale, because if you fall late on payments, the additional penalties will make it very challenging to remain current on the mortgage afterwards.

2. List your home using a real estate listing service or contract with a broker to assist you in the sale. Take detailed photographs of your home that showcase its best qualities. If you're making a short sale and are under significant time pressure, you can also choose to offer the home up for auction. Contact your lender for more information about that option, as the bank usually manages those sorts of sales directly.

3. Clean and organize your home to prepare to show it to potential buyers. You may want to pay for professional staging. What that means is that the service will come to your home, replace your furniture with rented items and decorate your home with artwork. This can sometimes increase your sale price significantly, making it worth the initial expense.

4. Negotiate with potential buyers until you find someone willing to purchase your home. If you're selling under significant time pressure--to avoid bankruptcy or foreclosure--you may have to accept a lower price than you would under other circumstances.

5. Pay off as much of the mortgage as you can with the proceeds from the home sale. If there's still some of the principal left on the mortgage, it will likely be small enough for you to manage it more easily until you finish paying it off.

References

• MSN Money: Use a Short Sale to Avoid Foreclosure
• ShortSaleWay: Short Sale Guide

Resources

• RealEstateABC.com: Home Selling Tips
• Bankrate: 20 Tricks to Selling Your Home